Banks urged to increase credits for sugarcane-based industries

Jakarta (ANTARA News) - Bank Indonesia (BI) is urging banks to increase their credits for sugarcane-based industries, BI Deputy Governor Muliaman D. Hadad said here on Tuesday.

"Banks` role in providing credits for sugarcane-based industries has remained small because the industries have not shown their real potentials," the central bank deputy governor said on the sidelines of a seminar on the prospects and financing of sugarcane-based industries.

He said there were actually a lot of banks which had provided credits for sugar industries. This was because the industries` non-performing loan level was low and they had good prospects not only in sugar production but also in the making of down-stream products such as ethanol.

Muliaman said BI had recorded that a total of 32 banks had financed projects in this sector with credits totaling Rp1.6 trillion.

He said the credit amount was relatively big but it still could be increased further. After all, this sector had good potentials

"Banks have begun to understand and to provide relatively big credits after these industries` experience was exposed to them," he said.

He said the sugarcane-based industires non-performing loan ratio was also small, namely only 0.33 percent in the plantation sector and 2.11 percent in sugarcane industries and its down-stream actvities.

The prospect of the financing in this sector was categorically bright as these industries needed some Rp8.3 trillion in the 2005-2010 period throughout the country.

But the BI official also said the problem faced by these industries did not only have to do with financing but also with technical aspects.

"The problems are not only related to financing but also to techincal aspects which we and other relevant agencies have to think of. This of course will need coordination," he said.

The industries also needed support in the form of clear policies with regard to environmental impact analyses in accordance with their condition without sacrificing the environment.